The Ultimate Reasons for Going Into Debt Quiz

The Ultimate Reasons for Going Into Debt Quiz
Image: iStockphoto.com/Marie Fields

About This Quiz

The reason most people go into debt is simply because they are living beyond their means. Learning some debt management skills may help you achieve financial security. Take this quiz to see how rich or poor your knowledge is of the reasons people go into debt.
Does income or assets determine eligibility for unemployment?
only income
only assets
neither
Neither income nor assets is used to determine eligibility for unemployment. Even millionaires may be eligible for unemployment benefits and many do collect.

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What percent of Americans spend more than they make?
10 percent
20 percent
40 percent
Some 40 percent of Americans spend more than they make.

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What are payday loans?
a loan from your employer
a cash advance against your paycheck
To accept a payday loan you must give a post-dated check to cover the loan plus interest and fees. In return for paying high interest and finance fees, you get a cash advance against your paycheck, immediately. These loans are for times when you cannot wait for your paycheck.
a loan due on your payday

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What are equity checks?
loans without any interest
loans without any penalty
loans secured by your home
These are checks written against the equity in your home. The amount of the check is added to your existing debt that is secured by your home.

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What is an unsolicited offer?
an unrequested offer
An unsolicited offer is one you did not request. If you did not ask for it, do you really want it?
an offer you applied for
a scam or gimmick

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Which U.S. entity established the Truth and Lending Act?
Internal Revenue Service
Federal Reserve
The U.S. Federal Reserve established the Truth and Lending Act.
Federal Deposit Insurance Corporation

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How does the Truth and Lending Act help consumers?
Creditors are now required to state all interest and fees.
Creditors are now required to notify consumers about changes in interest and fees.
Both answers are correct.
Creditors are now required to state all interest and fees, and must notify consumers of any changes in their terms.

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Why should consumers be wary of the small print on credit offers?
Creditors are looking to make a profit from you.
Creditors are looking to make a profit from your debt. Make sure to read all the information, including the small print.
Creditors are non-profit institutions.
Creditors are on your side.

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How do the 2009 U.S. poverty rates compare to other years?
lowest
steady
highest
The poverty rates in 2009 were the highest in the 51 years that poverty information has been tracked. This information is from the U.S. Census Bureau.

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Why do people with good credit histories receive lower interest rates on their debt?
They have higher incomes.
They are less or a risk for default.
People who have good credit histories are less of a risk for debt default.
They have more assets.

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For the future, what financial model will position you best?
saving and paying cash
Saving part of your earnings and paying cash, rather than taking on debt, may give you a better financial future.
spending and borrowing
living month-to-month

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In case of an emergency, how much savings do financial advisors recommend that you have?
two months
six months
Financial advisors recommend that you have at least six months or more of savings.
nine months

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What is the average saving rate for U.S. incomes?
six percent
On average Americans save less than six percent of their income.
eight percent
10 percent

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If people do not have savings, how do they pay for an emergency?
debt
Most people have to go into debt to pay for an emergency. An alarming number of bankruptcies are due to the high cost of medical emergencies.
family help
charity assistance

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How can a credit counselor help you with your debt?
lower interest rates
Credit counselors negotiate with your creditors, and may be able to arrange better terms for your debt.
increase debt
pay your debt

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What is debt settlement?
A lump sum is paid for less than the debt balance.
Debt settlement occurs when the creditor agrees to accept a lump sum payment that is less than what is owed and forgives the rest of the debt.
Some of the debt balance is forgiven.
Both answers are correct.
Debt settlement occurs when the creditor agrees to accept a lump sum payment that is less than what is owed and forgives the rest of the debt.

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How much does debt settlement cost?
less than $100
from $100s to $1,000s
If you hire a person to negotiate the debt settlement, the cost ranges from $100s to $1,000s.
no charge

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What is the reason most people get into debt?
poor spending habits
Most people get into debt because of bad spending habits. Spending cash prevent you from spending more than you can afford.
health emergency
unemployment

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You have charged $500 on your credit card with an interest rate of 14.7 percent. If you pay $15 every month, how long will it take to pay off the purchase of $500?
one year
two years
four years
It will take you four years.

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If a debt settlement company promises to have a substantial amount of your debt forgiven for a considerable fee, what should you do?
Accept it.
Be very cautious.
Before paying any debt settlement fees, make sure you research the debt settlement company. If an offer sounds too good to be true, it may be untrue.
Do not accept .

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You Got:
/20
iStockphoto.com/Marie Fields

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